Junior SIPP - tax relief?

[jinkster]

Hi all,

Looking at starting a Junior SIPP for my 3 year old daughter. Can someone explain to me how the tax relief works? I'm a higher rate tax payer. Will this be tax efficient for me or my daughter?

https://www.hl.co.uk/pensions/junior-sipp

Thanks

[joestifff]

I have them for mine with HL

It is your daughters tax relief, not yours.

HL will top it up with the 20% after a couple of months.

[macron]

It's tax efficient for you in the sense that post tax income that you might save anyway is bumped up, the provider will reclaim it on your daughter's behalf.

It's not tax efficient in that if you have headroom on your own, you can also claim the extra, give or take being able to drop it in pre-NI if you have that facility.

But it's better than nowt.

[kiethton]

Before I jump into a rabbit hole of regulation, are there any limits to this? If HL claim 20% can I claim back the other 25% in my own SA?

I'm about to stop my own pension payments as past the taper so my make sense to do something for my daughter if the benefit is doubled.

[c32dave]

You can’t claim anything extra yourself. You are effectively gifting the money to your daughter, which doesn’t attract tax relief. She then gets £720 relief on a £2880 contribution.

[alscar]

joestifff said:

I have them for mine with HL

It is your daughters tax relief, not yours.

HL will top it up with the 20% after a couple of months.

My wife has similar as a non earner which I started off contributing to a decade ago.
Pot now stands at double what I / HMG contributed.

[kiethton]

Ah fair, thanks

[Jockman]

Keep records. This may qualify as exempt from IHT under surplus income rules.

[jinkster]

Jockman said:

Keep records. This may qualify as exempt from IHT under surplus income rules.

Thats an interesting point....